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FNZ grows over 12% with German deal; NZ platform hits almost $14bn in profitable year

July 22, 2018

Adrian Durham: FNZ global CEO

Wellington-originated FNZ, has added almost 13 per cent to group funds under administration with the purchase of German investment platform firm, ebase.

In a statement last week, the Edinburgh-headquartered FNZ said it had struck a deal to buy the ebase platform from the German Comdirect bank for an undisclosed sum.

The FNZ Group, which includes the Wellington-based FNZ Limited, has boast fund under administration (FUA) of about NZ$420 billion compared to the NZ$53 billion held in the ebase system.

Until now, FNZ has grown FUA organically via a series of deals with Australasian and European institutions including Standard Life, Axa, UBS and JP Morgan in the UK.

Adrian Durham, FNZ co-founder, said in the release: “[The ebase deal] is an important milestone for FNZ Group and underlines our commitment to being the leader in the provision of B2B digital wealth management solutions for financial institutions and their clients in Germany and across Europe.”

Meanwhile, the NZ-based operations recently reported a net profit after tax of almost $4.6 million on revenue of just under $32 million for the 2017 calendar year: while revenue was up more than $2 million year-on-year the firm’s net profit after tax fell by a similar margin on higher employee and ‘other’ expenses.

The NZ-domiciled FNZ entity grew FUA by about $3 billion during 2017 to hit a total of almost $14 billion, the Australasian group’s chair Nick Sherry, says in the accounts.

Sherry says the latest growth spurt was “primarily due to on-boarding independent advisory firms through existing platforms”. FNZ provides the technology to a number of NZ adviser platforms including the fast-growing Consilium and the Boutique Advisers Alliance groups as well as several institutions such as BNZ.

Just over $17.3 million of the total FNZ revenue came by way of recurring fees (including $15.5 million of ‘wrap service’ fees and almost $1.6 million in cash management trust charges) with remainder sourced from related entities. FNZ levies ‘management recharge’ and ‘system development fees’ to related entities in the global group.

During 2017 FNZ also spent about $800,000 buying back the NZ portion of the firm’s ‘core’ intellectual property it had sold to its related Australian company the previous year: FNZ Australia paid about $6 million for the total intellectual property rights in 2016.

The NZ company also waived about $2.9 million in interest on a loan to the Australian entity in 2017.

Founded in Wellington in 2004, the now Edinburgh-headquartered FNZ employs over 1,600 people globally across NZ, Australia, UK, Singapore and the Czech Republic. Following the ebase deal, FNZ will add a further 265 employees, and 1 million-plus customers served by a client base of 270 banks, insurance companies, asset managers and independent financial intermediaries.

Last December FNZ also made a “strategic investment” in UK robo-advice firm, Advicefront. Launched in 2015, Advicefront provides a “collaborative digital client onboarding, engagement and advice tool for use by financial advice firms that want to scale their offering, reduce costs and increase productivity”, according to a statement.

FNZ is majority-owned by a couple of global private equity firms: HIG Capital, which bought out the original, mainly NZ-based, FNZ shareholders in 2009; and General Atlantic, which took a stake in 2012.

After morphing through several ownership structures, FNZ equity is ultimately held via a Caymans Island-registered entity, Kiwi Holdco CayCo Ltd.